The level of urbanization is an important benchmark for an economy in transit from poverty to middle income. During the process of urbanization in developed countries, the agriculture-based economy was gradually transformed to an industry-dominated structure and per capita energy consumption and energy intensity rose in tandem. After urbanization was completed and the tertiary industry became the main economic pillar, energy intensity declined correspondingly and per capita energy demand entered a stable stage with relatively low growth.
According to research by the Center of China Energy Economic Research at Xiamen University, China - given there are no major catastrophes - will enter the stage of urbanization of middle-income countries by 2020. A good understanding of energy consumption growth and rigid demand at this stage is imperative for formulating an effective energy policy and strategy.
China's urbanization rate in 2008 was 46 percent, far below the 61 percent in middle-income countries and 78 percent in wealthy countries. Rapid growth promotes urbanization process, which, in turn, will raise overall energy demand. By 2020, there will be an estimated 300 million people (equal to the US population) in China moving to cities.
The energy consumption of urban residents is around 3.5 to 4 times that of the rural population. China's fast urbanization would propel the construction of large-scale urban infrastructure and housing, which needs huge quantities of steel and cement that can only be produced at home, because no other country can afford supplying so much raw material. Therefore, the demand for energy-intensive industries of China's urbanization is rigid even taking into consideration the potential improvement of energy usage efficiency through technological progress.
First, more urban population need more housing, transportation, medical services, urban greening and so forth. The construction, operation and maintenance of this urban infrastructure would need more energy.